You may need to pay the higher rates of Stamp Duty Land Tax (SDLT) if you buy an additional residential property for more than £40,000.
When the higher rates apply
Individuals and companies need to pay the higher rates when they buy an additional residential property in England, Wales or Northern Ireland. The higher rates apply even if your other residential properties are outside any of these countries.
You’ll also need to pay the higher rates if you don’t own a residential property and buy at least 2 residential properties at the same time.
Rates on additional properties
|up to £125,000||3%|
|over £125,000 to £250,000||5%|
|over £250,000 to £925,000||8%|
|over £925,000 to £1.5 million||13%|
|over £1.5 million||15%|
You’ll need to pay the higher rates on everything you give for the purchase, this is called the ‘consideration’.
If you replace your main home
You won’t have to pay the higher rates if you sell your main home on the same day you buy your new home.
If you sell your main home after you purchase your new home you’ll need to pay the higher rate. You can claim a refund of the higher rates if your old home is sold within 3 years of buying your new home.
You can claim a refund by changing the original return or completing a SDLT repayment request form. This must be claimed within 3 months of the sale or one year of the filing date of the return, whichever comes later.
Purchases that aren’t charged the higher rates
You won’t have to pay the higher rates on a new property if the chargeable consideration is less than £40,000.
You also won’t have to pay the higher rates if:
- someone else holds a lease on the property with more than 21 years to run
- you purchase a lease that has less than 7 years to run
You won’t be charged the higher rates if your other residential properties meet either of the 2 criteria above or each have a value of less than £40,000 when you buy the new property.
The higher rates don’t apply to:
- mobile homes, caravans or house boats
- purpose built student accommodation
Multiple properties in the same building or grounds
Two or more properties bought together may be treated as one if:
- they’re in the same building or grounds
- the main property accounts for two-thirds of the total consideration
Ownership of the property
Spouses and civil partners
You may be viewed as the owner of a property if it’s owned by your spouse or civil partner.
This means if one of you already owns a property and the other person purchases another property, the purchase will be charged at the higher rates.
Spouses or civil partners that are permanently separated won’t be treated in this way.
You’ll be treated as owning a property if you receive all the income from it and the proceeds from its sale even if you’re not the legal owner.
The beneficiary of a bare trust will be treated as the purchaser of a property.
The beneficiary will also be treated as the purchaser if the trust holds property and the beneficiary is entitled to:
- occupy the property for life
- receive income from the property
When the beneficiary is under 18, the child’s parents are treated as the beneficiary.
The trustee will treated as the purchaser of the property if the trust:
- isn’t a bare trust
- doesn’t give the beneficiary a right to occupy a property for life or receive income from it
- purchases a property for over £40,000 that isn’t subject to a lease of more than 21 years
Companies and partnerships
Companies have to pay the higher rates when they buy any residential properties that are over £40,000 and aren’t subject to a lease of more than 21 years.
You’ll have to pay the higher rates if your partnership already owns a residential property and you purchase another residential property for your partnership.
You won’t have to pay the higher rates if you buy a property for yourself and your only additional properties are used for your partnership’s trade.
Where a trustee buys a property but a beneficiary doesn’t receive any benefits from that property, the purchase is treated as if it were made by a company rather than an individual.
If you inherit half or less of the major interest in a property in the 3 years before you make a purchase, and you don’t already have an additional residential property, you won’t pay the higher rates on that purchase.
More information is available in the HMRC staff manual on Stamp Duty Land Tax.